Whitbread reports slowing sales, but Costa resilient - UPDATE

Whitbread saw both reported sales and like-for-like (LFL) sales slow down in the 11 weeks to February 16th, as strong growth at its Costa coffee shop chain was met with a more subdued performance at its hotels and restaurants.

"Following the trend we highlighted in December, industry data has continued to show a soft hotel market in the UK, with a divergence in performance between London and the regions," said Chief Executive Andy Harrison. He said that the market RevPAR, or revenue per available room, in the regions has fallen by 3% in the fourth quarter so far, in contrast to a more robust performance in the capital.

Total group sales in the period rose by 10.1% on last year, compared with the 11.4% growth seen in the third quarter, bringing the total sales growth for the 50 weeks to February 16th to 11%. LFL sales slowed down from 2.4% to 1.8% quarter-on-quarter, bringing the 50-week figure down to 2.7%.

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LFL Restaurant sales have risen by 2.2% during the fourth quarter so far, down 0.1% in the 50-week period. Meanwhile, Premier Inn's LFL sales fell by 0.9% in the fourth quarter, bringing the 50-week rate of growth down to 3.4%.

Nevertheless, Costa remained resilient with LFL sales growing by 6.2% in the 11-week period (50-week: +5.8%). Reported sales for the 50 weeks now stand 25% higher than they were the year before, helped by a record number of new store openings, including 71 new stores in China. "We are approaching the first anniversary of the acquisition of Coffee Nation and the launch of Costa Express. We have been very pleased by the positive customer reaction and our growth plans for this business are ahead of our original expectations," the group said.

Shares were down 2.03% in early trading on Tuesday.

BC